A Top Coast Guard Official Warned it Could End up being “One of the Most Significant Oil Spills in U.S. History”

With news from the spill in the Gulf of Mexico oil rig getting worse — a top Coast Guard official warned it could end up being “one of the most significant oil spills in U.S. history”—questions are beginning to be asked about how it happened, and how it could have been prevented.

As The Wall Street Journal reported this morning, the oil rig lacked a device — known as an acoustic control — that would’ve served as a safeguard of last resort. While the effectiveness of the $500,000 device is debated, the Journal points out that it is used by other oil-producing nations, including Brazil and Norway. Regulators in the U.S. were also considering requiring it a few years ago, but after industry objections decided that the devices were expensive and needed more study.

So which regulator oversees rigs and made that decision? It was the Department of Interior’s Minerals Management Service, an agency that has had a spotty record over the past few years.

In 2008, we pointed out that MMS was in quite a bit of trouble for ethical violations by its officials. The scandal involved sex, drugs and (quite literally) sleeping with the very industry it was regulating. Here’s how The New York Times summarized the government’s investigation:

The investigation also concluded that several of the officials “frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives.” The investigation separately found that the program’s manager mixed official and personal business. In sometimes lurid detail, the report also accuses him of having intimate relations with two subordinates, one of whom regularly sold him cocaine.

That hasn’t been the end of MMS’s troubles. According to an audit earlier this month by the Government Accountability Office, the regulator has hardly been a straight shooter on offshore drilling and the risks involved. The GAO found that MMS withheld data on offshore drilling in Alaska from regional staff members at the agency involved in environmental analyses. The report also found that MMS lacked sufficient guidelines to properly analyze the risks of drilling in the region.

“We found considerable variation among MMS’s ... regions in how they assess what constitutes a ‘significant’ environmental impact,” reads the report (PDF). And on the withholding of data: “Some of its own scientists have alleged that their findings have been suppressed.” (In a formal response to the report, the Department of the Interior said it “generally agrees” with the findings.)

The Project on Government Oversight, a nonprofit watchdog, told us regulation wasn’t a priority for MMS.

“It was an agency that was very strapped in its human resources, and essentially the priority for the agency was on production rather than on regulation and oversight,” said Mandy Smithberger of POGO. She added that under Ken Salazar, who became secretary of the interior in January 2009, this may be changing, “but we have not seen material changes so far.”

One step in the process that oil companies must go through to get approval for drilling involves submitting an exploration plan that lays out worst-case scenarios. The Huffington Post points out that MMS did not require BP—which owns the well that blew up—to file a plan for reacting to a “potential blowout,” meaning an uncontrollable spill. According to The Huffington Post’s reporting, the more limited plan BP filed with MMS predicted that if worse came to worst, a spill would release 162,000 gallons of oil. The Deepwater Horizon spill has already exceeded that prediction.

That doesn’t make MMS look very good, since one of its officials vouched for BP’s plan at the time. From The Huffington Post again:

An MMS official certified that BP “has the capacity to respond, to the maximum extent practicable, to a worst-case discharge, or a substantial threat of such a discharge.” But after the explosion, the scale of the accident required BP to get assistance from the Coast Guard, other federal agencies and other oil companies such as Shell, which is sending half a dozen vessels to help with the clean-up effort.

We spoke with two people involved in the industry, who have also worked with MMS, who said that the branch of MMS that deals with safety inspections has a solid reputation, unlike the scandal-ridden part that deals with collecting royalties from oil companies.

“They have a lot of good people doing their best,” said Tyler Priest, a professor at the University of Houston. Priest said he sits on an MMS advisory committee and has done studies for the agency. “I’ve seen what they do up close, and it is a quality organization.”

We have called MMS and will include its response as soon as we get it.